Tulare hospital finally ready to finish tower they started

Tulare Local Health Care District issues RFP to finish construction of the unfinished medical tower

TULARE – The largest scar on the face of the Tulare Local Health Care District’s history of mismanagement, the perpetually unfinished tower, is finally being addressed.

In a week that began with the district attorney’s office levying more than 40 charges against the district’s former management, Healthcare Conglomerate Associates (HCCA), ended with a notice that they are in the early stages of completing the hospital’s tower.

At the recommendation of an ad hoc subcommittee including community advisors to the district’s board of directors, a request for proposals (RFP) has been issued. The RFP requests submissions from eligible firms to assist with its fundraising strategy to complete the tower.

“Having the best possible health care accessible for all residents and visitors of the district is the primary objective of the Tulare Local Health Care District. We have worked very hard over the past three years to emerge out of bankruptcy,” said Kevin Northcraft, president of the Tulare Local Health Care District Board. “Moving forward to complete the Tower construction is just one more step for us in the right direction.”

The tower was initially presented to voters as their attempt to expand its facilities by September 2005. Phase I of the expansion promised the construction of a 107,000-square foot tower south of the existing hospital building. This tower was designed to include a full basement and house an 11,000-square foot, 24-bed emergency department; a diagnostic department and associated equipment; a 16-bed obstetrics unit; four surgery suites; and 27 new private patient rooms.

The district stated in a press release last Friday they successfully reestablished the provision of hospital services and exited bankruptcy. In light of that the district is moving forward with a process to procure funds to complete the tower. Major tower construction efforts have slowed since funds from the $85 million raised from a general obligation bond passed by voters in 2005, and additional donations provided for its development, were depleted.

While the bond was passed by 83% of voters in 2005, after 10 years the tower was only 66% complete. The tower project’s failure is what prompted Tulare County’s grand jury to launch a seven-month investigation into the “gross malfeasance” of taxpayer money. Titled “Tower of Shame,” the March 24 report disclosed that Tulare Regional Medical Center (TRMC) incurred 700 change orders on the project amounting to $17 million in additional costs. The district was also forced to pay $7.9 million to settle litigation with its contractor over the delamination of the concrete in the upper floors.

The grand jury also found that the board of directors “routinely circumvented” public disclosure of project expenditures including withholding information and financial data from the Bond Oversight Committee between September 2007 and December 2015. The report also stated that the Board “failed to comprehend the issue of cost differential between the $85 million in bonds and the total cost of the project of $120 million.

At the time the projects dwindling failure fell into the hands of HCCA. The district trusted them implicitly with it’s completion. Of course that trust was ill placed according to this week’s front page story.

In 2016, HCCA Chair Dr. Benny Benzeevi said the tower had come a long way since his private group of physicians, health care administrators and developers took over the project in 2014. In April 2014, HCCA hired Jack Stones to take over sole management of the tower project. Stones helped HCCA consolidate five separate construction plans for the tower and have been able to keep their building permits by using some of the profits and a $3.5 million from the Tulare Hospital Foundation to keep construction going. The building was just a frame before HCCA, but is now completely enclosed, allowing interior construction to continue during one of the wettest years since the project began.

“I can’t speak to what was happening here before we took over but we are only interested in moving forward,” Benzeevi said. “What good does it do to point fingers. I think we can all agree things needed to change and they have.”

The district felt the only way to move forward was to finish the tower despite the bloating cost, and as a result they moved to put Measure I on that 2014’s ballot. The $55 million bond projected to be enough to finish the tower was resoundingly defeated by two-thirds of voters.

On March 22, 2017 the district’s board passed a resolution authorizing HCCA to pursue a $79 million loan through the Federal Department of Housing and Urban Development’s “HUD Mortgage Insurance” program and to seek funding elsewhere to complete construction on the hospital’s medical tower.

Then, on June 20, 2017 the board authorized HCCA to seek a $22 million loan on a 3-2 vote, with Northcraft and Jamaica dissenting. The resolution stated the loan would be used for operating expenses, repayment of debt, construction on the tower and “other Hospital purposes” following the rejection of Measure I. However, once then board president Dr. Parmod Kumar was unseated in a recall election, the decision was rescinded.

To date the building shell of the Tower is complete, as well as many of the items for the interior. Estimates for the completion of the project have ranged between $50 and $80 million, the variation of which depends largely on issues related to redesign and phasing of the Tower’s occupancy. The Tower is owned by and the responsibility of the Tulare Local Health Care District.

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